Lower Oil Prices Mean Less Pain at the Pump

A steady decline in U.S. gas prices since the summer has boosted Americans’ purchasing power despite continued sluggish growth in their take-home pay. That has raised hopes for a pickup in spending during the holiday shopping season that could lift the retail sector and the economy at large. Gas prices are plunging and before it’s all over, some experts say Americans will be paying a $1 a gallon less than a few months ago. That could mean $1,000 more per household in extra spending money. Those extra dollars and cents are giving people some financial breathing room. And they’re adding up to billions in extra cash for drivers across the country that could help stimulate the economy — at least in the short term.

Experts say one of the main causes of the price drop is the surge in domestic oil production flowing from thousands of wells in the Eagle Ford Shale near San Antonio and other oil plays. With that surge but without increased demand, the price of oil can go down. That might dampen the Texas energy boom, which affects far more than the balance sheets of oil companies. “It’s a wonderful outcome for U.S. consumers, but it’s wreaking havoc on (oil) prices,” said Karr Ingham, who developed and maintains the Texas Petro Index for the Texas Alliance of Energy Producers. “We are one of the states where higher prices for energy are a net economic positive.” Ingham, the developer of the Texas Petro Index, said a couple factors are coming together to create lower gas prices: the development of shale oil fields such as the Eagle Ford and a slowdown in global demand for crude oil. “For the broad, consuming U.S. public, I don’t know if there’s appreciation on their part for the energy miracle that’s playing out before their very eyes,” he said. “

Lower prices at the pump might also encourage drivers to buy bigger, gas-hogging trucks and SUVs at a time when local officials are trying to curb automobile pollution and reduce levels of unhealthy ground-level ozone. “When (gas) prices go down and stay down, people are more likely to purchase a larger, less-efficient vehicle,” said Kaiba White, energy policy and outreach specialist with the Texas office of the environmental advocacy group Public Citizen. “This will still be a bad deal over the lifetime of the vehicle because gas prices won’t stay low.”

Andy Lipow, president of Houston energy consulting firm Lipow Oil Associates LLC, said gas prices are at their lowest point in four years. He predicted that they’ll continue to drop through the end of the year. Though the lower prices might be a mixed blessing for the Texas economy, for San Antonio drivers who rely on their vehicles to commute to work, drive children to school and simply get around a sprawling city, right now it means more money in their pockets.

“If oil comes down from around $100 (a barrel) to the lower $80s like it has, it’s likely not going to slow drilling very much, if any at all in the Eagle Ford,” Keith Phillips, chief economist with the San Antonio branch of the Federal Reserve Bank of Dallas, said. “But what it does do is provide quite a bit of a kick to consumer spending in this area.

Bullets

• According to the EIA, America’s domestic oil production has grown from 5.6 million barrels per day (bbl/d) in 2011 to 7.4 million bbl/d last year. And the administration’s short-term energy outlook is projecting continued “rapid production growth” for this year and 2015 — with the projected production forecast for 2015 averaging 9.5 million bbl/d.(cbsnews.com)

• Renewable energy could fully power a large electric grid 99.9 percent of the time by 2030 at costs comparable to today’s electricity expenses, according to new research. A well-designed combination of wind power, solar power and storage in batteries and fuel cells would nearly always exceed electricity demands while keeping costs low, scientists found. (sciencedaily.com )

• A new measurement of dark matter in the Milky Way has revealed there is half as much of the mysterious substance as previously thought. Australian astronomers used a method developed almost 100 years ago to discover that the weight of dark matter in our own galaxy is 800,000,000,000 times the mass of the Sun. (sciencedaily.com)

• Offshore wind power is a valuable source of renewable energy that can help reduce carbon emissions. Technological advances are allowing higher capacity turbines to be installed in deeper water, but there is still much unknown about the effects on the environment. Scientists have now reviewed the potential impacts of offshore wind developments on marine species and make recommendations for future monitoring and assessment as interest in offshore wind energy grows around the world. (sciencedaily.com)

• Concrete is the world’s most-used construction material, and a leading contributor to global warming, producing as much as one-tenth of industry-generated greenhouse-gas emissions. Now a new study suggests a way in which those emissions could be reduced by more than half — and the result would be a stronger, more durable material.(sciencedaily.com)